SEC probes trading affiliates of crypto giant Binance’s US Arm

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SEC Probes Trading Affiliates of Crypto Giant Binance’s U.S. Arm

BY CAITLIN OSTROFF | UPDATED FEB 15, 2022 01:02 PM EST

Regulator is interested in trading firms with links to Binance’s founder, people familiar with the probe say

The Securities and Exchange Commission is examining the relationship between the U.S. arm of Binance, the world’s largest cryptocurrency exchange, and two trading firms with ties to Binance’s founder, people familiar with the probe say.

The two trading firms, Sigma Chain AG and Merit Peak Ltd., act as market makers that trade cryptocurrencies on the Binance.US exchange. One area of focus for regulators is how Binance.US disclosed to customers its links to the trading firms, the people say.

On its website, Binance.US says that affiliated market makers may trade on the exchange, though it doesn’t name which firms might do so.

The SEC requested information about the two entities from Binance.US, which is Binance’s U.S. affiliate and is the subject of an existing enforcement probe, the people said.

Corporate documents from 2019 tie Changpeng Zhao, Binance’s founder and chief executive officer, to the two trading firms, and former executives say that as of late last year Mr. Zhao controlled them both.

A spokesman for Binance.US, Zachary Tindall, declined to comment on the SEC probe and any relationship with the two trading firms. “Binance.US is committed to upholding the highest standards of compliance," he said.

A spokesman for Binance, Stephen Milton, said as a private company it doesn’t need to disclose details of its investor or corporate structure. “However, that information is shared with regulators when requested." Mr. Milton said Mr. Zhao wasn’t available for comment. Mr. Zhao is the majority